Intraday Market Update
After Friday afternoon's recovery equities are holding their ground amid mixed corporate news, and as traders await tomorrow's FOMC monetary policy announcement. After the string of recent economic reports there is a high degree of uncertainty about the Fed's announcement and many analysts are speculating about the possibility of new stimulus measures. Volume is extremely light and all of the major indexes are holding onto gains in early afternoon trading. Overseas, markets in the Asia-Pacific region were mixed with advances in China (+0.53%), Australia (+0.63%), and Hong Kong (+0.57%), while Japan lost -0.72%. Solid gains were posted across Europe with most indexes gaining about +1.50%. Germany's DAX index closed at a new 52-week high.
There is no major US economic data to report today and all eyes are now firmly focused on tomorrow's FOMC announcement. Jan Hatzius, Goldman Sachs chief economist, said he believes the Fed will restart its quantitative easing this week. Such easing measures may come in the form of the Fed buying mortgages and treasuries which is designed to increase the money supply. The theory goes that as more money is available it is supposed to increase spending as the excess money trickles throughout the economy. However, it is debatable whether or not the recent easing policies of the Fed were as successful as they had hoped for. Higher lending standards and cautiousness among businesses has put a strain on the effectiveness of the Fedâ€™s easing policies. On the flip side of the further easing policies the Financial Times reported that even though the FOMC is expected to downgrade their assessment of US economy, it is unlikely to announce new steps to boost growth. The reaction to tomorrow's announcement will be critical to trading throughout the remainder of the summer.
In equities, Dow member Hewlett-Packard (HPQ) is down -7% after the company's Chairman, CEO, and President Mark Hurd decided to resign effective immediately amid the claims of sexual harassment by a former contractor at the firm. McDonalds (MCD) is up +1.3% after the firm announced same store sales jumped +7% y/y. In earnings, DISH Networks (DISH) is down more than -10% after reporting strong earnings that beat on the top and bottom line, however, the firm lost -20,000 subscribers and saw its churn rate increase. Tyson (TSN) is off -4% after they beat consensus estimates in their Q3 report, however, the company warned that revenue would be flat y/y.
Core Sector List:
NOTE: I have expanded my list of core sectors from 16 to 20. The additions are Telecommunications, Real Estate, Natural Gas, and Coal.
Overall reading: 17 sectors advancing, 3 sectors declining
Strongest Sectors: Home Construction, Transportation, Real Estate
Weakest Sectors: Coal, Gold, Oil Services
S&P 500 - Daily and 30-minute Intraday Charts:
Dow Jones - Daily and 30-minute Intraday Charts:
NASDAQ - Daily and 30-minute Intraday Charts:
Russell 2000 - Daily and 30-minute Intraday Charts: